US 10 year yields, daily
Last week, Goldman Sachs warned that a rise in 10-year yields to 4.30% could create a negative feedback loop with stock markets.
We’re getting close as 10-year yields rise 5.6 bps today to 4.286%, which is the highest since late July. The latest leg higher comes after a 2-year sale tailed by 0.8 bps. We also get a sale of 5-year Treasury notes today.
Jamie Dimon also once again warned today that inflation might not go away.
What’s concerning for the bond bulls is that today’s rise in yields comes despite a 6% decline in oil prices, something that will undoubtedly feed into Oct/November CPI data. Though you could take the long view and wonder if a year from now a return to a ‘normal’ oil prices of $80 (a 20% rise from here), will push headline CPI higher and cause the Fed to halt any cutting cycle that might be underway. Natural gas prices are also down 10% today on better weather forecasts.
Eyes are on the US election as well and rising yields fall into the theme of a ‘red sweep’ and all the tax cuts that might come with it. House betting odds currently slightly favor Republicans.